May wheat was trading 4 3/4 cents lower late in the overnight session. Outside market forces look negative today with a firm US dollar and weakness in metal, energy and equity markets. The outlook for increasing supply and ending stocks ahead helped to pressure the market in recent days and Minneapolis wheat led the market lower last week as the USDA sees a jump in planted area for the coming season. The EU believes that wheat production for the 27-nation bloc will reach 131.9 million tonnes for the 2012/13 season, up 2.5% from this past season. May wheat closed slightly higher on the session Friday and up sharply from the lows of the day. The market closed 6 1/2 cents lower for the week and traded inside of Tuesday's range for Wednesday, Thursday and Friday. With a larger than expected wheat production and ending stocks outlook from the USDA conference, the market pushed lower even with another break in the US dollar. USDA economists pegged US planted area at 58 million acres for the 2012/13 season, up 3.6 million from last year and up 1.5 million acres from the USDA baseline projections from just a few weeks ago. Spring wheat planted area is expected to jump after losing millions of acres to floodwaters last year. US ending stocks for the 2012/13 season are expected increase to 957 million bushels from 845 million this year and 862 million last year. Net weekly export sales came in at 701,600 metric tonnes for the current marketing year and 55,800 for the next marketing year for a total of 757,400 which was about as expected. As of February 16th, cumulative wheat sales stand at 88.5% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 85.6%. Sales of 201,000 metric tonnes are needed each week to reach the USDA forecast. Algeria bought 300,000 tonnes of milling wheat in their tender for 125,000 tonnes. Iran seeks to import 1 million tonnes from Pakistan in a barter deal. A continued lack of significant rains in the forecast for the near-term for the central and southern plains, weakness in the dollar and a recovery in corn were all factors which may have helped support the rally to close higher on the day. The Commitments of Traders reports as of February 21st showed Non-Commercial traders were net short 59,580 contracts, an increase of 8,966 contracts for the week and the selling trend is typically seen as a bearish force. However, the net short is close to the record net short of 60,698 contracts so many traders believe the market is vulnerable to short-covering if resistance levels are violated. Non-Commercial and Nonreportable combined traders held a net short position of 76,521 contracts, up 5,412 for the week. Commodity Index traders held a net long position of 209,437 contracts, down 1,754 for the week.
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